Streetwise Professor

October 30, 2011

Who Are You Going to Believe? VVP or Your Lying Eyes?

Filed under: Economics,Politics,Russia — The Professor @ 8:08 pm

Not long ago, Vladimir Putin told an assemblage of foreign executives that Russia was a great place to invest.  How great?  Well, don’t ask Mikhail Prokhovrov.  Prokhorov made the mistake of getting enmeshed in the machinations of Kremlin political technologists, and had the temerity to show a smidgen of independence.  Bad idea.  So now Putin is sending Mikhail a little reminder of how tenuous his fortune and his empire are:

A delay in allowing billionaire tycoon Mikhail Prokhorov’s gold firm Polyus to sail into the prestigious FTSE 100 Index, while probably procedural, leaves nagging concerns that politics and business in Russia make for a dangerous cocktail.

The postponement, ordered by a committee chaired by Prime Minister Vladimir Putin, comes just two months after Prokhorov’s sudden exit from Russian politics following an acrimonious clash with the Kremlin.

In his brief foray into politics, Prokhorov had hoped to lead a liberal party that enjoyed official backing into December’s parliamentary election, but his autonomy and ambition unnerved Russia’s leaders and he was abruptly ousted.

Putin’s announcement that he will run for a third term as president in 2012 has reinforced concerns amongst Russia’s super rich that they own their assets at the pleasure of the country’s rulers. Prokhorov’s fortune has been estimated at $18 billion by Forbes magazine.

“The power is such that nothing is really safe,” said one industry source.

Nice little gold company you got here, Mikhail.  Pity if something happened to it–or to you.  Mikhail.  That name sounds familiar–just like Mikhail Khodorkovsky, no?

Need another example?  How about more travails for BP?  TNK-BP is continuing its efforts to torture the British supermajor: its management board is recommending that the full board vote to join in a shareholder lawsuit against BP for its attempt to deal directly with Rosneft:

But the legal net is tightening around BP after TNK-BP’s management recommended its main board discuss filing suits claiming billions of dollars in damages over the failed Rosneft bid.

The disclosure, which came on the eve of BP’s third quarter results, looked aimed at raining on the UK oil group’s parade as it seeks to turn a corner following the Gulf of Mexico disaster and the botched Rosneft deal.

The move looks likely to pose a serious new headache for the group, which is already battling a slew of lawsuits over the Rosneft bid claiming it breached a shareholder pact granting TNK-BP the right of first refusal to any new venture in Russia or the Ukraine.

So go ahead.  Be a sucker.  Listen to Putin’s blandishments.  Fools and their capital are soon parted.

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29 Comments »

  1. Prokhorov is a self-absorbed twat interested only in gratifying his own petty ego and advancing his sociopathic neoliberal agenda as opposed to acting in Russia’s national interests.

    Comment by Sublime Oblivion — October 31, 2011 @ 12:27 am

  2. S.O., just two tiny mistakes in your apt characterization: the neo- word should be neosoviet, and the P-word should be Putin. Good job nonetheless.

    Comment by Ivan — October 31, 2011 @ 12:55 am

  3. Go shill for Prokhorov then and enjoy your 60-hour workweek while he cavorts with prostitutes at Courcheval.

    Russian liberals truly are as dumb as the Tea Party. Now if only they could all trundle off and create their own country, both Russia and the US would be a lot better.

    Comment by Sublime Oblivion — October 31, 2011 @ 2:16 am

  4. Putin will be running Russia for at least the next 10 years. Get used to it. Medvyedev is disposable.

    The Russian elitny will do things their way. If the west doesn’t like it they can sot off, Russia doesn’t need them. This pisses off the west badly.

    Russia is the biggest country in the world. Russia possesses vast quantities of mineral, fossil fuel, water, and timber wealth. The rest of the world needs Russia, Russia does not need them.

    The west will do business with Russia, Russia’s way–currently Putin’s way.

    Any day they want to Russia can slam the fortress gates shut and survive nicely. This pisses off the west badly, they need to be needed.
    Russia needs the west for nothing.

    Of course there are a variety of political and economic game that can be played, still Russia sits on the winning hand. That why western politicians and business people are badmouting Putin. He’s got what they want.

    After the Apocalypse the Russians will go back to their land and grow potatoes, the rest of the world be damned. It has always been so.

    Comment by gardener1 — October 31, 2011 @ 2:35 am

  5. @gardener-you need to get outside the Moscow city limits. Russians never left the land and are growing potatoes even now. How else would they eat? If you believe Putin has deep support throughout the country you are mistaken. What he does have is widespread resignation.

    From your post I guess Putin has started on his To Do list in particular the item portraying himself as the main force standing between all good peoples and the Western enslavement gangs.

    The only one sitting on a winning hand was Medvedev and the winning hand he was sitting on belonged to the ventriloquist-Putin. The Putin win was only in retaining the limited power that he has to terrorize expedient targets. I remember at the beginning of his first term he pledged to reduce the Federal bureaucracy. The bureaucracy made it clear they didn’t want to be reduced and so he just abandoned the attempt and found easier prey. Anyone that has capital in Russia has something to loose and so becomes target prey if any political mistakes are made. There is no fundamental strength or leadership demonstrated in choosing prey and eviscerating that prey for all to see. It is just thuggish bullying more than anything else.

    Comment by pahoben — October 31, 2011 @ 7:56 am

  6. There are situations in which everyone is wrong, but any one who thinks that Putin is other than a Kleptocrat – a sort of Russian Mobutu (that will drive the slavophile racists crazy!) is simply not paying attention. Granted Russian history and the artistic pretensions (and in some cases, real talent) of the Tsarist Aristocracy have given him a better backdrop to work with than poor old Mobutu sese Seiko (“lion who mates with everybody”, or some such). Both are from the same cloth, however. Just look at the silly guard uniforms Putin has the Kremlin Keystone Kops wear – and ridiculous trumpet flourishes when he entered a door – like they were guarding a Ruritanian prince as opposed to a Gebist, rumored pederast* thug who will pick the victim of the day or week to publicly disembowel. Sort of like showing the Pot metal fist under the cloth glove (made from a painting of Elvis done on black velveteen).

    Even the attempts to disguise and at the same time demonstrate dictatorial power such as the election of President Medvedev are exercises in the grossest political cynicism. Yes Putin will be with us: that says more about Russia than Putin, however.

    *The later, as they say in Scotland, is not proven.

    Comment by Sotos — October 31, 2011 @ 8:48 am

  7. Russia is the biggest country in the world. Russia possesses vast quantities of mineral, fossil fuel, water, and timber wealth.

    This has been the case since Russia’s inception. Perhaps enormous tracts of uninhabited land full of trees isn’t what generated wealth after all?

    Comment by Tim Newman — October 31, 2011 @ 9:02 am

  8. @Sotos–re uniforms. It’s not just the guards. Ever seen Putin in any of his military get-ups? I like the one where he wears a piss-cutter (Navy uniform, if memory serves). And Medvedev is a riot when he wears his bomber jacket with the “Commander-in-Chief” monogram. No, Nicky II had nothing on Putin.

    @S/O–I’ll grant you your description of Prokhorov. The problem is that it is equally applicable to just about anyone in the Russian “elite”–starting with your man crush. Especially your man crush.

    The ProfessorComment by The Professor — October 31, 2011 @ 9:20 am

  9. Dear Professor,

    I had forgotten about those – on second thought Mobutu had batter taste. Alos he died in his own bed – tet’s see if Putin makes it.

    Comment by Sotos — October 31, 2011 @ 10:25 am

  10. Putin is a thief, that’s quite clear.

    http://larussophobe.wordpress.com/2011/09/11/special-extra-personal-corruption-of-vladimir-putin-revealed/

    So, by his own logic, Putin should get his face smashed.

    Comment by La Russophobe — October 31, 2011 @ 9:09 pm

  11. Russia has become the most dangerous place in the world to fly, according to figures from the Aviation Safety Network.

    http://news.sky.com/home/world-news/article/16099572

    Comment by La Russophobe — November 1, 2011 @ 6:01 am

  12. “Putin’s announcement that he will run for a third term as president in 2012 has reinforced concerns amongst Russia’s super rich that they own their assets at the pleasure of the country’s rulers.”

    So Putin’s Russia is no different than Brezhnev’s USSR. Except that Brezhnev’s USSR wasn’t as dominated by the KGB.

    Comment by La Russophobe — November 1, 2011 @ 6:02 am

  13. “Russia’s central bank predicts capital flight to double to $70 billion this year.”

    http://www.washingtonpost.com/business/economy/russias-central-bank-predicts-capital-flight-to-double-to-70b-this-year/2011/11/01/gIQAG2lmbM_story.html

    Comment by La Russophobe — November 1, 2011 @ 6:05 am

  14. @sotos-please remember that for its history Russia has been governed by people and not laws. In the legacy Soviet system everything imaginable can be interpreted as violating some regulation or law and so requires a special deviation be approved by a regulator. Government by people is always corrupt. Most Russians realize this but to start from scratch and build everything anew is extremely difficult. The bureaucracy must be dismantled completely and then a strong system of laws put in place. I doubt it could be done non violently and the prison system would need to be expanded greatly for a period of time. The other option for a citizen is to muddle along trying to play his hand as best he can.

    Most Russian’s saw the US as having an enviable strong system of laws and low corruption but the current administration is trying its best to reverse that. The Obamacare exceptions are a case in point. Exceptions are granted at the largesse of someone in the government who then obtains something in return. Government by exception is an exceptionally bad form of government but that is what Russia has now in large measure as a legacy from the Soviet period.

    Comment by pahoben — November 1, 2011 @ 6:23 am

  15. @pahoben. Exactly. The average Russian, while biting his lip over Putin’s return, knows that if a new government came into place, the whole system would go haywire. As my Russian friend said, “We don’t really like Democracy because if we elected new rulers, there would be blood in the streets because the new officials would be working full time to extract everything the previous ruling class stole. That was the 1990′s and we don’t want that again.” It made perfect sense despite the feeling of wanting to kill myself after hearing it.

    Comment by Howard Roark — November 1, 2011 @ 1:19 pm

  16. Another quote from a Russian related to the wealth of resources the country has, “We have everything, but we have nothing.” Russia has always been sitting on vast wealth but can never seem to use it to their advantage like a society of laws can. I don’t know why I can be so fascinated with a country that can be so depressing.

    Comment by Howard Roark — November 1, 2011 @ 1:22 pm

  17. > Government by exception is an exceptionally bad form of government but that is what Russia has now in large measure as a legacy from the Soviet period.

    The saying that the severity of Russian laws is compensated by non-obligatory compliance was widespread before the Soviet period.

    Comment by Ivan — November 1, 2011 @ 1:24 pm

  18. And what worries me about the US is that we are converging to Russia from above. Re your point, Howard, the main thing that got me fascinated with such a depressing place is that it provides a great laboratory for seeing what happens in the absence of a rule of law, property rights, and basic liberties. A libertarian dystopian novel brought to life.

    The ProfessorComment by The Professor — November 1, 2011 @ 2:36 pm

  19. @Ivan- My point was that although non obligatory in general it provides a handy weapon to use as selective enforcement against a targeted individual. I believe it was used as a weapon first during the Soviet period but I may be mistaken.

    @Howard-I understand your friend’s attitude. As for me personally I have been told that I would have been imprisoned in a mental hospital during Soviet times. I can well imagine that would have been the case.

    Comment by pahoben — November 1, 2011 @ 4:59 pm

  20. Professor-It feels like in the US we are still in the Introduction of a Dystopian novel. Another four years of this POTUS would likely get us though the first chapter It wiould not be kind of an interesting William Gibson cyberpunk Dystopia but probably closer to A Clockwork Orange theme.

    Comment by pahoben — November 1, 2011 @ 5:41 pm

  21. @pahoben–I agree. Unfortunately I think it’s a quick read. A lot easier to go down into a hole than climb out of one.

    The ProfessorComment by The Professor — November 1, 2011 @ 8:47 pm

  22. Yup not nearly enough creative power for a decent long read.

    Comment by pahoben — November 1, 2011 @ 9:30 pm

  23. My point was that although non obligatory in general it provides a handy weapon to use as selective enforcement against a targeted individual.

    Exactly. When you run a business in Russia, as I have, you are keenly aware that you are breaking the law somehow, as it is impossible not to. You are therefore at the mercy of the authorities who may or may not decide to act against you. This is the way the Russian authorities like it: everyone is a criminal, we merely choose to let you roam free.

    Comment by Tim Newman — November 1, 2011 @ 11:16 pm

  24. A horrifying story about censorship in Putin’s Russia.

    http://www.time.com/time/world/article/0,8599,2098410,00.html

    Russians are blind and ignorant, a laughingstock around the world just as in Soviet times, because they are ruled by the KGB. And it is their fault, they chose this doom.

    Comment by La Russophobe — November 2, 2011 @ 2:48 am

  25. China and Russia at bottom of globe for bribery/corruption.

    http://economictimes.indiatimes.com/news/politics/nation/chinese-and-russian-firms-fare-worst-in-bribe-payers-index-as-india-improves/articleshow/10579226.cms

    China and Russia lead world in crushing Internet freedom.

    http://www.themoscowtimes.com/business/article/russia-airs-views-on-internet/446976.html

    Could these two facts be related?

    Comment by La Russophobe — November 2, 2011 @ 3:01 am

  26. Actually the multitude of laws and regulations is key to maintaining rule by person or personality – where very one is per force a criminal, all are vulnerable to the state. This gives the state functionaries complete power. This was noted by many dissidents , Andrei Amalrik among them, though the theme of corruption and overweening personal power was a theme in Russian arts from at least the mid 19th century. See “The Government Inspector” (sometimes called “The Inspector General”) by Gogol, a tale of political stupidity, corruption and greed.

    Attempts were made to suppress publication of this play. Peculiarly enough, these attempts were thwarted by the arch reactionary Tsar Nikolas I. Not only did he allow continued publication, but also performances and even went to one: his comment at the time was supposed to be “We got everything we deserved, especially me!”.

    It is a depressing measure of how far from hope Russia has fallen when you consider what a thug like Putin would have done, or that the most reactionary Tsar ( pace Alexander III) of the 19th Century seems more capable of personal honesty and clear sightedness than her current leader.

    What is even more depressing is that the same process of “over criminalization” seems to be happening here, too.

    Comment by Sotos — November 2, 2011 @ 6:17 pm

  27. @Sotos and @Ivan-hanks for the pre Soviet info.

    Comment by pahoben — November 2, 2011 @ 6:57 pm

  28. > What is even more depressing is that the same process of “over criminalization” seems to be happening here, too.

    Well, with “Atlas Shrugged” over half a century old, you cannot say America has not been warned. God bless Georgia (the smaller one), I say.

    Comment by Ivan — November 3, 2011 @ 12:10 am

  29. Breaking news out of Germany: “Putin was an enthusiastic womanizer and a violent bully who beat his wife.”

    http://dyingrussia.wordpress.com/2011/11/07/the-barbaric-brutality-of-the-russian-man/

    Comment by La Russophobe — November 7, 2011 @ 3:27 pm

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